Motorola cops class action law suit over handset woes

Stuart Corner
Thursday, 06 September 2007 07:16

IT Industry - Deals

Motorola is facing a class action law suit alleging that it failed to disclose problems with its handset business, disregarded these problems and that it deliberately mislead shareholders.

The shareholder class action has been filed by law firm of Schiffrin Barroway Topaz & Kessler, LLP in the United States District Court for the Northern District of Illinois on behalf of anyone who purchased share is Motorola between July 19, 2006 and January 4, 2007.

It alleges that Motorola and certain of its officers and directors failed to disclose, misrepresented or recklessly disregarded key information about the state of the company's handset business. Namely:

- that Motorola was suffering from poor product and geographic mix in the mobile services segment;
- that it was suffering from reduced margins and pricing pressures as a result of shifting consumer demand and purchases;
- that it was unable to adequately offer 3G products when consumer demand increased because it was not acquiring the necessary chipsets from its suppliers;
- that its performance in Europe was suffering as a result of its limited 3G product portfolio;
- that its products were not meeting internal expectations or sales targets; and
- that, as a result of these problems, Motorola's statements about its financial wellbeing and future business prospects were lacking in a reasonable basis when made.